I'll try to keep this as specific as possible as to prevent the "...it depends" responses. I understand this is a lengthy post, but it is all in the interest of garnering the most pointed advice.

BLUF: Wife and I own a previous-dwelling single family home (House A); we moved to a new area, purchased a new single family home (House B). Looking for advice on holding out for a sale of House B to regain capital, or listing the House B for rent.

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In 2013, my wife and I purchased a 1974 2-story "fixer" in Clovis, NM via a no-money down VA loan, which we poured our blood, sweat, and tears into for 3 years: refinishing the exterior, installing hardwood floors, upgrading countertops, repainting all the walls and trim, retiling showers, blowing out walls, replacing light fixtures, etc.. While we never drained our bank accounts into the home, we spent approximately $20,000 in our own capital over those 3 years (materials, tools, hired help) to improve the property from its original $185k purchase price to our max renovation budget at its original appraisal value of $205,000; this does not include the many, MANY hours of DIY that we put into the home to help save our dollars, but in hindsight, we realize we may have lost that investiture. Our hopes were to sell at $109/sqft, which was right below the going average of homes in July of this year, putting us right around the $275,000 mark.

The military recently sent us on to Florida for a short notice assignment and in our last 60 days in NM, we finished up all our remaining renovation projects prior to listing the house for sale with a local realtor (the same one we used to purchase the home).

We've since moved to our new location here in Florida, and while our property in NM has received numerous online viewings, open house walkthroughs, and private showings, all with positive reviews, we've yet to receive an offer (even after dropping the price by $25k to $249k after the first month...now extremely competitive at $99/sqft). The feedback we receives lends us to believe that buyers are venturing the way of small "cookie cutter new" rather than sprawling "renovated with character."

Our realtor has mentioned that this is the worst iteration of the seller's market in her many years of experience in the area, and while we want to be hopeful that it will regain steam, we are worried that we'll be left paying a mortgage for a home that holds a good bit of our capital. Additionally, we are set to close on a new construction build in Florida in the next two weeks (queue the financial stress...). We are financing this newer home under our current VA loan cap using almost all of our remaining capital from savings for the required down payment.

With the high probability of holding two mortgages, one of which will be on a home that sits vacant in a buyer's market, we are wondering which avenue to take: hold out for the market to cycle back in the seller's (our) favor and regain our investment capital, or list the house for rent and make the slow, laborious climb to our target savings using small return in cash flow (assuming we ARE able to cash flow).

In summary:

Originally purchased at: $184,900, $74/sqft (Principal Remaining $177,000)

Invested: $20,000

Currently Listed for Sale at: $249,000, $99/sqft

Break-even Renovation Price (including 6% realtor commission / Closing): ~$230,000, depending on closing cost arrangements.

Days on Market: 61

Net Rental Income to Positive Cash Flow $200.00 (including 10% property management, 10% for repairs): $1750.00, equates to Fair Market Rent for sqft, house specs, and location

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With our goals of purchasing our first investment property by September 2017, I am concerned by the opportunities lost in keeping all of our investment capital tied up in the NM home; I'm equally concerned that if we choose to leave it on the market, we will end up paying two mortgages until the market takes an upward turn, a duration of time of which I have no prediction.

By my rough calculations, it will take ~19 more months before the additional mortgage payments we pay into the home overtake the profit (aside from capital) we would have made from a sale on Day 1. It will take approximately ~36 months for those mortgage payments to eat up the capital we would have had from a sale on Day 1. Additionally, if we leave the house on the market, we will be netting a significantly lesser value per month based on sheer fixed income vs. 2x houses worth of outgoing expenses.  

If we choose to rent the property, I'm confident we can cash flow $150-$200 with long-term leases, but I'm worried about taking an older home and putting it through the "ringer" of potential tenants; especially knowing that we want to eventually sell.

*Pulls hair out*

With that being said, has anyone had experience with renting older (1970's-1980's era) homes? Do you ever worry about the risk of renting negatively affecting (destroying) your property to the point where it is no longer marketable for sale?

What about the first-time flippers in the room - any experience flipping an older house and then choosing to rent it out (with aspirations to eventually sell)?

Any and all advice is greatly appreciated as we are currently gathering information and resources on becoming landlords/renting. Thanks!

- Mark